How Much Does It Cost to Hire an Employee?

Published by:
Dan Gates
February 28, 2020
min read

Debiased Hiring Bundle

XpertHR has released a survey packed with data that is sure to be of interest to anyone in recruitment. One of the main insights is that over 52.8% of respondents expect their employer to recruit more permanent employees over the next year. In fact, companies are set to recruit a median number of 55 new employees this year.

Think it’s about time you saw some new faces lurking by the photocopier? Before you go into recruitment overdrive, you should probably get a decent sense of how much it’s going to cost. This article will show the average cost of recruiting a new employee. Once you’ve ascertained how much you’ll have to fork out, we’ll provide some tips to help you get your money’s worth. 

So, what’s the average recruiting cost per hire? 

Like any regular business expense, it’s important to have benchmarks. Perhaps you’re paying too much, or maybe you’ve got some leeway to invest more in recruitment. According to Glassdoor, the average employer spends about £3,000 and 27 days to hire a new employee. There is only a slight variation in the figure provided by XpertHR. These guys place the average recruiting cost at just over £2000. This cost, however, excludes the recruiting cost per hire for managers and directors. Below are some stats for average Time to Hire and recruiting costs, broken down by seniority:

 Time to Hire Statistics (Average Recruiting Costs) 

  • 10 weeks for directors (£12,780) 
  • six weeks for managers (£3,945)
  • four weeks for staff (£2,158)

How do you calculate recruitment costs?

This is pretty straightforward. Simply tot up your external and internal recruitment costs, then divide them by the total number of hires. 

Some employers don't consider all the direct and indirect costs involved in hiring. A pretty obvious direct recruiting cost is using a recruitment agency. This can cost approximately 20-30% of your new hire’s salary. Based on the average UK salary, this amounts to roughly £5000. 

One indirect cost is the time spent carrying out pre-hiring assessments and interviews. Time is money, as the old saying goes. Training costs are another example. According to the Undercover Recruiter, the average UK company spends over £1000 per employee on training. Many companies also offer cash incentives as part of their employee referral schemes. 

Are recruiting costs rising? 

Going back to XpertHR’s report (we told you it was full of data!), approximately 40% of employers report increasing costs per hire. They cite a range of factors, the most notable being the tight labour market. According to the Financial Times, UK employment is at its highest rate since 1971. Secondary factors include an increase in digital recruitment methods and outsourcing to agencies. 

With that in mind, it’s now more vital than ever that employers get their hiring decisions right the first time. This is where we come in. 

We built the Applied recruitment platform so employers can make hiring decisions based on what matters. This means not gushing over the fact that someone attended a Russell Group uni, or making snap decisions based on whether you like the cut of their jib. We make it easier than ever for employers to screen candidates, based on the skills and attributes they’ve deemed to be the most important. 

The Applied platform revolves around the concept of ‘blind hiring’. All applications are anonymised and randomised, so that no unconscious biases creep in and cloud your judgement. The application process is broken down into set questions. These questions evaluate whether candidates possess those desired and essential skills. Each answer is then given a numerical score. All you need to do is look at the scores and voila - the top-performing candidate is revealed! 

There you have it, a data-driven hiring process that’s easy to use and even easier to depend on. As a bonus, we'll help you write your job description to reach the widest pool of candidates possible. 

Sound good to you?
Request a demo of our hiring platform today, and a member of our team will tell you all you need to know. We also offer a range of resources, so you remain informed about the latest goings-on in the recruitment industry.